[Congressional Record Volume 152, Number 115 (Friday, September 15, 2006)]
[Senate]
[Pages S9660-S9661]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS:
  S. 3904. A bill to extend the generalized system of preferences 
program under the Trade Act of 1974, to extend the Andean Trade 
Preference Act, to extend certain trade preferences under the African 
Growth and Opportunity Act, and for other purposes; to the Committee on 
Finance.
  Mr. BAUCUS. Mr. President, today I introduce the Emergency Trade 
Program Extension Act of 2006.
  For more than 30 years, the United States has opened its vast market 
to developing countries through trade preference programs. We have done 
so to encourage greater economic development and openness in those 
countries. The United States is the largest market in the world. And it 
is also one of the most open. And this openness has played an important 
role in economic development, both in the United States and around the 
globe.
  Two important preference programs are set to expire at the end of 
this year: the Generalized System of Preferences and the Andean Trade 
Preference Act.
  I know that some have criticized these programs, GSP in particular, 
for being unnecessary, inefficient, or counterproductive. They argue 
that the majority of the imports that benefit from GSP come from just a 
handful of middle-income countries. And they argue that the truly 
poorest developing countries barely use the program at all. Many of the 
most active users of GSP--like Brazil, Thailand, Indonesia, and 
Argentina--have developed strong export sectors. This raises the 
question of whether they even need preference programs to compete on 
the world market.
  And critics charge that big GSP beneficiary countries like India and 
Brazil were among the most recalcitrant in supporting greater market 
access in the Doha Round negotiations. They claim that the active 
efforts of these countries contributed to the collapse of the Round. 
Why, they ask, should we keep our markets open to such countries, if 
they will not open their markets to us?
  I am not deaf to these criticisms. I think that there is much truth 
in them. But before we allow these important programs simply to expire, 
I believe that we should examine them in detail. We should explore 
whether and how they might be changed to address valid criticisms. We 
should understand the effect that canceling them might have on the U.S. 
image around the world, U.S. diplomatic efforts, and our trade 
priorities in the Doha Round and elsewhere. And we should give those in 
the United States who rely upon these programs an opportunity to 
explain how their interests might be adversely affected by cancelling 
GSP and ATPA.
  The Office of the U.S. Trade Representative recently began a review 
of the GSP program to look at many of these very issues. That review 
will not be completed until mid-November, at the earliest. I believe 
that we should preserve the status quo until we in the Congress have 
had an opportunity to digest the outcome of that review and conduct our 
own analysis.
  GSP is important to keeping countries engaged in the trade 
liberalization dialogue. For one thing, these countries are interested 
in maintaining benefits under the program. As a result, they are more 
willing to address concerns that we may raise with them. GSP-
eligibility has given us leverage to address bilateral trade problems--
such as intellectual property protection--and to persuade beneficiary 
countries to respect international norms on labor rights, human rights, 
and other matters. And as they gain more experience in international 
markets, they can see the benefits of liberalization in action. Without 
GSP, those countries might see China or other big exporters take over 
their share of our market.
  Most of the imports from GSP beneficiaries occur outside the program. 
U.S. imports from GSP beneficiary countries in 2005 exceeded $248 
billion. Of that, less than $27 billion--less than 10 percent--entered 
duty-free under the GSP program.
  GSP is much more important to the least developed countries. One-
third of the total imports from these countries were under GSP 
preferences. Many of the least developed countries depend on

[[Page S9661]]

GSP to sell their products into the American market. They have worked 
hard to establish export-oriented industries, but still need the extra 
boost provided by GSP or other preference programs.
  Some of our other preference programs target these very poor 
countries, including the preferences under the African Growth and 
Opportunity Act and the Caribbean Basin programs. But for a large 
number of countries--including Afghanistan, Armenia, Bangladesh, 
Bosnia-Herzegovina, Cambodia, and Pakistan--there are no other programs 
to help them compete against other exporters in the U.S. market.
  GSP is also important to U.S. competitiveness. Raw materials and 
components for further processing make up more than two-thirds of the 
products imported under GSP. For example, GSP imports make up a 
significant percentage of U.S. total imports of leather processed after 
tanning--45 percent, ferroalloys--37 percent, aluminum sheets--25 
percent, and copper wire--25 percent.
  American retailers have taken advantage of the programs to find new 
products and new sources of supply. And every year, U.S. consumers save 
millions of dollars because of GSP duty savings.
  Trade preferences for our Andean partners have helped curb the 
production and smuggling of drugs. Trade can encourage diversification 
out of drug crops, and offer an economic future to people who otherwise 
are easy prey for narcotraffickers. The Andean preference programs play 
a significant role in facilitating exports from Colombia, Peru, Ecuador 
and Bolivia. Almost 60 percent of exports from those countries are 
covered by these preferences.
  Some argue that trade preferences for the Andean countries are now 
both unnecessary and ill-advised. They say that the preferences are 
unnecessary because the United States has negotiated free trade 
agreements with Peru and Colombia. And they say that the preferences 
are ill-advised in extending benefits to Bolivia and Ecuador, both of 
which have taken actions and made statements recently at variance with 
U.S. interests.
  While we have negotiated free trade agreements with Peru and 
Colombia, neither has passed the U.S. Congress. It is far from clear 
that the U.S.-Peru agreement will even be considered in Congress before 
the Andean preference program expires at the end of this year, and 
there is no chance at all that the U.S.-Colombia agreement will be. We 
should extend the Andean preference program for these countries to 
avoid a lapse in benefits prior to the implementation of any free-trade 
agreement with them. Such a lapse would be disruptive to Peru and 
Colombia. And such a lapse would be disruptive to U.S. businesses, as 
well.
  It may be that there are good arguments for ending the program with 
respect to Bolivia and Ecuador. But again, I believe that we should 
give Congress time to examine these arguments as well as any 
counterarguments and make a reasoned judgment about the future of the 
program.
  That is why I am sponsoring the Emergency Trade Program Extension Act 
of 2006. This bill will extend both GSP and the Andean Trade Preference 
Act for 2 years. This is a short-term extension to allow the Congress 
to have hearings and consider in depth what should be done with these 
programs. I do not believe that we should let these programs expire 
without the benefit of a thorough analysis of their merits and 
failings.
  Some may argue that this legislation is unnecessary. They may say 
that we can allow these programs to expire, consider them in depth next 
year, and then renew them retroactively if we so decide. Indeed, we 
have done that before. But that is very disruptive, both to U.S. 
businesses and the countries that rely upon these programs. The 
uncertainty of whether the programs will be renewed retroactively, or 
renewed at all, undermines the goals of encouraging investment in the 
beneficiary countries. So we should pass this legislation to maintain 
the integrity of these programs while we consider what to do with them.
  This legislation also includes a 1-year extension of the third-
country fabric provisions in the African Growth and Opportunity Act, or 
AGOA. These provisions are currently set to expire in September of next 
year. Those provisions allow Africa's poorest countries to import 
fabric from countries outside of Africa for use in their apparel 
industries. These third-country fabric provisions have helped create 
jobs in desperately poor countries like Lesotho, where one textile 
worker supports numerous family members. U.S. retailers looking to next 
year's products are making their sourcing decisions now. If they cannot 
be confident that Africa will continue to be able to import third-
country fabric, then they will stop sourcing from Africa. And tens of 
thousands of jobs could be lost.
  This bill is not intended as the final word on AGOA. I fully expect 
that the next Congress will consider a comprehensive reform of AGOA. 
Many worthwhile ideas have been proposed. But we do not have time to 
consider them before Africa will begin to feel the effects of the 
expiration of third-country fabric provisions next fall. We should give 
Africa breathing space while Congress completes its work.
  The suspension of the Doha Round negotiations at the World Trade 
Organization has sparked a period of soul searching and debate in the 
trade community both here and abroad. Our trade preference programs 
should be part of that debate. It simply makes no sense to look at 
these programs in isolation from the wider discussion about the future 
of trade policy. And we cannot look at the future of the trading system 
without considering the treatment of developing countries in that 
system.
  For all of these reasons, I am proud to sponsor the Emergency Trade 
Program Extension Act of 2006. I am proud to note, as well, that this 
bill is a companion to an identical bill introduced yesterday in the 
House of Representatives by my friend the ranking Democratic member of 
the Ways and Means Committee, Mr. Rangel. I applaud his leadership on 
these issues. And I look forward to working with him to get this 
important legislation passed into law.

                          ____________________